By Paul Vieira
OTTAWA--Canada is seeking to create 125,000 jobs and increase corporate revenue by billions annually by ensuring domestic firms receive priority from a sizable increase in defense spending.
A new defense-industrial strategy from Prime Minister Mark Carney lays out a blueprint on how Ottawa intends to spend the tens of billions allotted to ensure Canada's defense spending accelerates to reach 5% of economic output, or the threshold agreed to by the North Atlantic Treaty Organization. Furthermore, the strategy focuses on reducing its reliance on U.S. suppliers, amid increased trade and geopolitical tensions with the Trump administration, with an eye toward closer defense ties with Europe, the U.K. and the Indo-Pacific.
"Canada has a long history of working closely with the United States and looks forward to a continued strong Canada-U.S. defense relationship," the strategy said. "To ensure greater resiliency in uncertain times, Canada is also undertaking efforts to diversify and build new defense-industrial relationships."
The Canadian government plans a formal reveal on Tuesday. The made-in-Canada defense strategy was scheduled to be published last week, and journalists were sent a copy under embargo. The announcement was delayed as the Prime Minister, Mark Carney, focused on the fallout from a shooting in northern British Columbia that left at least nine people dead.
The Financial Times published a story on Sunday outlining the defense strategy's contents. Other media outlets followed with their own accounts.
In the government's annual budget plan last year, Ottawa pledged to spend over 80 billion Canadian dollars, equivalent to about US$59 billion, on a cash basis to upgrade the Canadian military. Officials now estimate that total spending related to the military--from procurement to investments in defense-related infrastructure--will total about C$500 billion by 2035.
The Carney government is looking to capitalize on that new spending to create new jobs, as the country's manufacturing sector struggles under the weight of hefty tariffs imposed by the Trump administration on goods like steel, aluminum, motor vehicles and forest products.
Overall, Canada said the strategy would lead to the creation of 125,000 jobs, an increase in annual revenue among the country's small- and medium-sized firms of C$5.1 billion, and a 50% increase in the country's military exports.
Canada's strategy intends to award defense contracts to domestic firms. In the event that's not possible, it will pursue partnerships with multinational firms from trusted allies. "Partnerships will be defined by joint work, joint building, and the sharing of key technologies and intellectual property in a manner that reinforces our alliances and underpins Canadian sovereignty," the government said.
When it's not feasible to produce domestically or partner with an ally, Canada said it would purchase new military equipment from abroad - although with conditions related to further investments in Canada's industrial base and guarantees that Canada maintains "sovereign control" over the assets.
Prior to Carney coming to power, Canada had agreed to purchase 88 F-35 fighter jets from U.S.-based Lockheed Martin to help augment its aging fleet of aircraft. However, Carney ordered a review of that purchase, and Sweden's Saab has made an aggressive push for Canada to buy some of the company's Gripen jets.
Carney's policy priority is to reorient the Canadian economy to rely less on the U.S., which has implemented a protectionist trade policy. About 20% of Canada's gross domestic product is tied to two-way trade with the U.S.
Write to Paul Vieira at paul.vieira@wsj.com
(END) Dow Jones Newswires
02-15-26 2121ET
